How expensive fuel affects the lives of farmers

The introduction of a temporary ban on the export of motor fuel from Russia, which was announced on September 21, was forced, among other things, by problems of the agro-industrial complex (AIC). Agricultural producers have been experiencing problems for more than a month, not only due to a sharp rise in prices, but also simply due to the inability to buy fuel.

“We already have problems with the availability [топлива], we will now stop the harvesting and will not drop out of winter crops. This will be a disaster,” warned Agriculture Minister Dmitry Patrushev in the State Duma in early September.

A Vedomosti source in one of the agricultural holdings confirmed on September 21 a fuel shortage on the market. He also pointed to queues at refineries (for the shipment of fuel – Vedomosti), disruptions in delivery schedules and rising prices for fuels and lubricants. According to him, from the end of July to mid-August, diesel fuel in the small wholesale market, where farmers usually purchase it, increased in price by 40-70%. For example, in the Moscow region, the price of a ton of diesel during this time increased from 60,900 rubles. up to 92,800 rubles, in the Kursk region – from 62,800 rubles. up to 108,500 rub. The shortage of fuel and the rise in prices over the past month is confirmed by the owner of the Lazarevskoye farm, Kristina Romanovskaya. According to her, the cost of diesel increased by 15% due to “artificially inflated prices.”

The increase in fuel prices in small wholesale was also noted by the President of the Russian Grain Union Arkady Zlochevsky. He says that “in the moment” the cost of a ton of diesel fuel [в мелком опте] reached 120,000 rubles. Deputy Chairman of the Reliable Partner Association Dmitry Gusev clarified that this price was registered two weeks ago in Krasnodar. Zlochevsky notes that the owners of oil depots explain this abnormal rise in prices by an increase in stock quotes, as well as a halving of damper payments to oil workers from September 1.

A representative of the Ministry of Agriculture confirmed on the evening of September 21 to Vedomosti that the ministry was “still receiving” appeals from regions about rising diesel prices. The Ministry of Agriculture is promptly working on them with the Ministry of Energy, Russian Railways, fuel companies and other interested organizations, the ministry added. On average in Russia, the small wholesale price for diesel fuel in September is 75,500 rubles/t including VAT, but there is a significant range of prices across regions – from 68,000 to 104,000 rubles/t, a representative of the press service of the Ministry of Energy clarified to Vedomosti.

Previously, the Ministry of Energy compiled an operational balance of diesel fuel distribution among companies by month and communicated these recommendations to oil companies, a representative of the department recalled. Both ministries monitor fuel supplies to farmers on a weekly basis, press service representatives emphasize.

In addition, on September 11, the FAS announced that it would check the possibility of manipulation of fuel prices in small wholesale, including for farmers. A FAS representative declined to provide additional comments to Vedomosti.

The increase in prices for petroleum products in small wholesale occurred following a record increase in quotations on the St. Petersburg International Trading Exchange Commodity Exchange. According to trading data, the wholesale price of diesel fuel began to rise at the end of July, and already in August it began to reach historical highs. The latest record was registered on September 19 – 75,035 rubles/t. A slight decrease in exchange prices occurred only after threats from the Ministry of Energy and the government to take “radical measures” to stabilize the situation on the motor fuel market. Diesel quotes have been declining for the second trading session: on September 21, it was trading at 71,869 rubles per ton.

Vedomosti sent inquiries to the largest oil refining companies in Russia.

Prices for diesel fuel in small wholesale rose by mid-September compared to the level before the start of the harvesting campaign (July 10-16) by 29% and reached 75,108 rubles/t as of September 10-17, Vedomosti was told in “ Petromarket”. At the same time, growth continues in September – diesel increased in price by 1.8% compared to the previous week, the company notes.

From Petromarket’s data it follows that small-scale wholesale prices for diesel are rising not only in agricultural regions. For example, the largest increase in diesel fuel prices since mid-summer was registered in the Voronezh region – by 54.4% to 84,552 rubles/t, as well as in the Chelyabinsk (48.73%), Vladimir regions (46.74%) and Chuvashia (44.21%). At the same time, in the Oryol region and Mordovia, fuel prices fell by 10.12% and 10.7%.

But, according to Zlochevsky, suppliers began to demand additional payments for fuel under already concluded contracts. “The difference is approximately 46 rubles per liter. Fuel cost 68-69 rubles/l – we thought this was a high price. And now it exceeds 100 rubles/l,” Zlochevsky clarifies. According to him, the farmers will complete the harvest in any case, but the sowing of winter crops will be carried out “as long as the money lasts.”

President of the Union of Grain Exporters Eduard Zernin notes that the situation with fuel for farmers is “gradually changing” for the better, but the main problem with shortages remains. Patrushev also said on September 20 that the situation with fuel for the agricultural sector is gradually improving, but “still requires increased attention.” “Russian farmers can pay an extremely high price by missing the agronomic deadlines for seasonal field work,” warns Zernin.

The situation with fuel supplies to farmers in the southern regions began to stabilize after the government decided to limit fuel exports. About it stated September 22 TASS Deputy Minister of Agriculture of Russia Maxim Uvaidov. “It is important for us, especially during the harvesting period and now, that there is enough fuel for our agricultural producers. <…> There were interruptions [с поставками]but today the situation is stabilizing,” he said.

To combat rising prices for petroleum products and their shortage on the domestic market, the Ministry of Energy, the Federal Antimonopoly Service and Deputy Prime Minister Alexander Novak, who oversees the fuel and energy complex, have been discussing various options for regulating the market since June, including the introduction of a protective export duty on gasoline and diesel at $250/t.

Regional authorities, in turn, began to help farmers themselves. For example, the governor of the Tula region Alexey Dyumin ordered the allocation of 70 million rubles. to compensate for rising prices for petroleum products to agricultural producers.

Leading analyst of the National Energy Security Fund Igor Yushkov explains that prices in small wholesale continue to rise “by inertia,” although diesel fuel on the stock exchange has become cheaper for the second trading session in a row. According to him, this trend will reach the small wholesale segment in a couple of weeks.

Independent expert Kirill Rodionov recalls that problems with the supply of petroleum products to the regions arose, among other things, due to problems in the Russian Railways network: a shortage of freight and throughput capacity, and locomotive traction. He also points out that railway workers “often have poor organization of technical operations with trains” (forming and disbanding trains) – this further delays the delivery of fuel from refineries and oil depots. In turn, a representative of Russian Railways told Vedomosti that the company accepts all requests for the transportation of fuel on a priority basis and “delivers almost 100% of products on time.”

A member of the State Duma Committee on Energy, Yuri Stankevich, believes that against the backdrop of rising prices for petroleum products, it is necessary to consider the issue of increasing financing as part of compensation for the costs of agricultural producers for transporting products. This year the government has allocated 7 billion rubles for these purposes. According to Stankevich, in July-August, wholesale prices for petroleum products increased significantly against the backdrop of an increase in the tax burden on oil refiners, a weakening ruble exchange rate and the dynamics of energy prices on the world market. He also noted that Russian refineries produce more than 80 million tons of diesel per year, of which farmers consume no more than 5%.